Topic: Recent economic and financial developments

1. China’s Emergence in the World Economy and Business Cycles in Latin America

   Working Paper 2012-32 - Ambrogio Cesa-Bianchi, M. Hashem Pesaran, Alessandro Rebucci, TengTeng Xu

   The international business cycle is very important for Latin America’s economic performance as the recent global crisis vividly illustrated. This paper investigates how changes in trade linkages between China, Latin America, and the rest of the world have altered the transmission mechanism of international business cycles to Latin America.

   Topics: Business fluctuations and cycles; Econometric and statistical methods; International topics; Recent economic and financial developments; Regional economic developments

2. On the Adjustment of the Global Economy

   Bank of Canada Review Article: Bank of Canada Review - Spring 2012 - Carlos De Resende, Claudia Godbout, René Lalonde, Eric Morin, Nikita Perevalov

   This article discusses three scenarios for the adjustment of the global economy. In a “baseline” scenario—which encompasses fiscal consolidation in major advanced economies, growth-friendly structural reforms in Europe and Japan, and greater exchange rate flexibility and reforms in the emerging-market economies of Asia to induce rotation of demand away from net exports—global current account imbalances are resolved over the medium term and strong global economic growth resumes. In one alternative scenario, in which these conditions are delayed, global imbalances persist and growth is substantially reduced. In the second alternative scenario, in which advanced economies front-load fiscal consolidation, but no rotation of demand takes place in the emerging-market economies of Asia and no structural reforms are implemented in Europe and Japan, even weaker global economic growth occurs in the near term.

   Topics: Balance of payments and components; Exchange rates; Fiscal Policy; International topics; Recent economic and financial developments

3. A Foreign Activity Measure for Predicting Canadian Exports

   Discussion Paper 2012-1 - Louis Morel

   The author constructs a measure of foreign activity that takes into account the composition of foreign demand for Canadian exports. It has a number of interesting features.

   Topics: Balance of payments and components; Exchange rates; Recent economic and financial developments